Agility logistics raises profit despite falling revenue
Agility posted an 11 per cent increase in second-quarter net profit yesterday thanks to growth in its infrastructure division.
The rise came despite a drop in overall revenue, the Kuwait-based logistics company said.
Net profit in the three months to June 30 climbed to 15 million Kuwaiti dinars (Dh182.62m), from 14m dinars in the year-earlier period, the company said. Revenue declined by 6 per cent to 309m dinars from 328m dinars in the year-earlier period.
Agility’s results beat the forecast from the investment bank Sico Bahrain, which had projected a second-quarter net profit of 13.7m dinars. The results outperformed the forecast because of better-than-expected earnings from the infrastructure business, said Ayub Ansari, an analyst at Sico.
“Although the external market environment continues to be a challenge, particularly to our commercial logistics business, we are continuing to improve our financial performance by growing our infrastructure portfolio of companies and simultaneously driving transformation of our GIL (global integrated logistics) business,” said Tarek Sultan, Agility’s chief executive.
The company plans to borrow to partly fund US$1.5 billion of investments in property and logistics as it targets a 150 per cent jump in ebitda (earnings before tax, interest, taxes, depreciation and amortization) to US$800m by 2020, Mr Sultan said in April.
Agility’s logistics business, its main money earner, suffered from anaemic trade growth and low shipping and freight rates, with net profit dropping by 10 per cent to 233m dinars.
“‘Subdued’ trade forecasts for the year, to quote the WTO, continue to impact the freight forwarding market,” said Mr Sultan. “However, Agility GIL was able to record volume growth in its core air and ocean markets and is focusing on products and markets that are growing despite sluggish overall volumes.”
World trade is forecast to grow at 2.8 per cent this year, unchanged from last year, owing to the slowing Chinese economy and financial market volatility, among other factors, the World Trade Organisation said in April. This year will be the fifth in a row of global trade growth dipping below 3 per cent, the WTO said.
“Looking ahead, tepid global trade activity will continue to weigh on Agility’s Logistics operations,” said Mr Ansari.
Agility’s infrastructure division recorded a 12 per cent increase in net profit to 80m dinars.
“The infrastructure group continued to show growth in this quarter, driven by new projects and a commitment to improving efficiency and productivity,” said Mr Sultan.
“Each entity is pursuing its individual strategy, with most companies using their strong foundation in the Middle East to actively pursue opportunities to grow in the region, Africa and elsewhere.”
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Published: August 8, 2016 04:00 AM